Last of 17 Eurozone Nations Approves Boosting Bailout Fund

Slovakian lawmakers on Thursday approved expanding the size and powers of the EU bailout fund, making them the last of the 17 eurozone nations to approve boosting the fund.

The Slovak parliament had rejected the changes to the bailout fund on Tuesday because a junior coalition partner, the center-right Slovakian Freedom and Solidarity party, was against it.

In an effort to force that party to vote in favor, Slovakian Prime Minister Iveta Radicova (herself a member of the Slovak Democratic and Christian Union) had tied the vote on the bailout fund to a confidence vote in the government. When the vote failed, her 1-year-old government collapsed.

The main opposition party, Direction-Social Democracy, a left-leaning group, agreed to help the outgoing coalition approve the expanded fund in a second vote in exchange for early elections.

On Thursday, parliament voted in favor of holding early elections in March, with 143 in favor and 3 against. Just a half hour later, they approved boosting the bailout fund — 114 were in favor, while only 76 votes were needed.

“There is an agreement,” said Erik Tomas, a spokesman for the Direction-Social Democracy party, in a recent The New York Times article. “Smer [Direction-Social Democracy party] agrees to support the financial mechanism and the coalition agrees to elections on March 10.”

“We will proceed with ratification of the bailout mechanism immediately after the constitutional law on early elections is approved,” Robert Fico, a prominent "leftist" and  head of the Direction-Social Democracy party, told reporters.

The timing of the European Financial Stability Facility vote depends on how quickly lawmakers get through the debate and ballot on the early election, said Mikulas Dzurinda, the chairman of Radicova’s party in a Bloomberg article.

“We call upon all parties in the Slovak Parliament to rise above the positioning of short-term politics, and seize the next occasion to ensure a swift adoption of the new agreement,” said a joint statement from José Manuel Barroso, president of the European Commission, and Herman Van Rompuy, the president of the European Council.

As mentioned above, Slovakia is the last of the 17 eurozone nations to approve boosting the bailout €440 billion ($600 billion) fund (the EFSF). The fund will be able to lend quickly to governments before they are in a full-blown crisis and to help them boost banks' health, reports Bloomberg.

The changes to the bailout fund not only expand it but also give it new powers to "help strengthen Europe’s vulnerable banks."

As a result of the political move, to agree on a second vote in exchange for early elections, Fico's leftist party is currently the strongest political force in the country and stands a good chance to win the early ballot in March.

The Associated Press contributed to this story.